Grain Market Insider: August 29, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| SEP ’23 | 469.5 | -9 |
| DEC ’23 | 486.75 | -9.5 |
| DEC ’24 | 508 | -6.75 |
| Soybeans | ||
| NOV ’23 | 1392.5 | -13.25 |
| JAN ’24 | 1405 | -11.5 |
| NOV ’24 | 1314.25 | 0.75 |
| Chicago Wheat | ||
| SEP ’23 | 569.75 | -18.25 |
| DEC ’23 | 600.5 | -16.5 |
| JUL ’24 | 656.5 | -12.25 |
| K.C. Wheat | ||
| SEP ’23 | 714.5 | -23 |
| DEC ’23 | 729.25 | -20.5 |
| JUL ’24 | 732.5 | -14.75 |
| Mpls Wheat | ||
| SEP ’23 | 755.75 | -9.5 |
| DEC ’23 | 785.75 | -5.75 |
| SEP ’24 | 806.5 | -1.5 |
| S&P 500 | ||
| SEP ’23 | 4500.75 | 58.5 |
| Crude Oil | ||
| OCT ’23 | 81.19 | 1.09 |
| Gold | ||
| OCT ’23 | 1944.4 | 16.5 |
Grain Market Highlights
- Spillover weakness from wheat and soybeans, combined with better than expected crop ratings pressured the corn market into the close after it traded on both sides of unchanged earlier in the session.
- Flash sales totaling 350k mt of soybeans, soybean meal and cake to unknown destinations for the 23/24 marketing year were not enough to offset the bearishness of better than expected soybean crop ratings, as all three legs of the soybean complex closed the day in the red.
- Global markets and Brazilian harvest pressure may be adding to the weakness in the wheat complex as prices for all three classes continued their slide lower.
- The US dollar traded 0.42% lower today after reversing course yesterday and trading to its highest level since early June last Friday. The contract is showing signs of being overbought and could lend support to commodities if it follows through to the downside.
- To see the current US 7-day Precipitation forecast and the 8 – 14 day Temperature and Precipitation Outlooks from NOAA, scroll down to the other Charts/Weather Section.
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Corn
Action Plan: Corn
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
No Action
2024
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
Corn Action Plan Summary
- No action is recommended for the 2023 corn crop. This year’s growing season has been marked by dry conditions and changing weather forecasts, which have swung prices nearly 150 cents from high to low. Though dry conditions remain, with a great amount of variability in crop conditions from region to region, it may not be until after harvest before we know the full effect this growing season had on yields. Just as Insider recently recommended selling half of the previously recommended DEC 580 puts to lock in gains in case the market turns higher, Insider will continue to monitor market conditions and may consider recommending selling the remaining DEC 580 puts if conditions warrant it. While many unknowns could still shock the market higher, seasonality and current trends suggest we may not see a shift to higher prices until after harvest.
- No action is currently recommended for 2024 corn. In 2012, the best pricing opportunities for Dec 2013 corn were during the 2012 summer runup. Despite the significant yield losses to the 2012 crop, and the fear of running out of corn, the Dec 2013 contract peaked in the summer of 2012, and by Jan 2 of 2013, the price was already down about 12% from the high. We continue to watch the calendar for 2024 corn as this 2023 summer volatility could provide some additional opportunities to get some good early sales on the books in the event of a 2013 type repeat. Insider recently recommended making a sale on your 2024 crop, and we’ll be watching for another opportunity to suggest adding to prior early sales levels between now and the beginning of September.
- No Action is currently recommended for 2025 corn. 2025 markets are very illiquid right now, and it may be some time before conditions are conducive to consider making any recommendations. Be patient as we monitor the markets for signs of improvement.
Market Notes: Corn
- Selling pressure across the grain complex pressured corn futures as prices reversed off the session highs and Dec corn closed 9-1/2 cents lower on the day. The weak price action damaged the charts technically and could bring additional selling pressure for tomorrow’s session.
- Weekly crop progress numbers showed corn rated good to excellent fell only 2% to 56%, where a 3% drop was expected, and 17% of the crop was rated poor to very poor. The eastern Corn Belt ratings improved week over week, despite the recent hot weather.
- Weather forecasts are staying on the warmer and drier side, but the impact of Hurricane Idalia in the Gulf could trigger some moisture in the Corn Belt.
- As harvest moves closer, basis levels could be under pressure as end users become more comfortable with front-end supplies, as well as receiving freshly harvested corn. The possibly softer cash market tone will likely weigh on futures prices.
- Brazilian corn crop harvest is nearing completion at 83% harvested last week. The northern regions are starting planting of next spring’s new crop, with 7% of corn being planted as of last week.
Above: After trading mostly sideways since the end of July, December corn posted a bearish reversal on 8/21 after testing the 495 – 516 resistance level. While the reversal is a bearish development, prices could turn higher if the market receives additional bullish input. Should that happen, resistance above the market remains between 495 – 516. If not and prices turn lower, support may be found near 460 and again near 415.
Soybeans
Action Plan: Soybeans
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
No Action
2024
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
Soybeans Action Plan Summary
- No action is recommended for 2023 soybeans. This season the market has experienced a lot of volatility, not only from USDA reports but also from the changing weather forecasts, crop conditions, and export sales. We ended the month of July experiencing hot conditions with little rainfall and weak export sales. Since then, conditions have become more favorable, and export sales have picked up. While much of the crop remains in drought conditions, which can maintain upside potential, timely rains may come and push prices lower. Much like in 2012, when July was dry, and the pattern changed in August, when decent rain fell in parts of the western Corn Belt and IL, sending Nov ’12 soybeans down 20%. For now, Insider may not consider suggesting any additional sales until after harvest. Although, we will continue to monitor the market for any upside opportunities in the coming weeks.
- No action is recommended for 2024 crop. Grain Market Insider continues to monitor any developments for the 2024 crop, though it may not be until after harvest or toward year’s end before we will consider recommending any 2024 crop sales.
- No Action is currently recommended for 2025 Soybeans. 2025 markets are very illiquid right now, and it may be some time before conditions are conducive to consider making any recommendations. Be patient as we monitor the markets for signs of improvement.
Market Notes: Soybeans
- Soybeans ended the day lower, along with both soybean meal and oil, after yesterday’s Crop Progress report showed very little crop degradation compared to what trade was expecting. Export sales this morning offered some support earlier in the day before prices faded again.
- Yesterday’s crop progress data showed little degradation in the soybean crop with good to excellent ratings falling only one point to 58% despite the heat and dry conditions. Trade was expecting 56%. 91% of the crop is setting pods and 5% is dropping leaves.
- As the US becomes more competitive with Brazil, exports have begun to pick up over the past few weeks with two sales being reported today. 246,100 metric tons of soybeans were sold to unknown destinations for the 23/24 marketing year, and 105,000 metric tons of soybean meal were sold to unknown destinations, also the 23/24 marketing year.
- Weather forecasts over the next 14 days or more are showing above normal temperatures and below average precipitation which could cause crop ratings to fall more significantly in the coming weeks.
Above: On August 28 the market gapped higher and closed above the 1381 – 1401 resistance area, which may now become support. Though supportive, markets tend to fill gaps over time, and it may be drawn to fill the gap left between 1390-1/2 and 1394-3/4. For now, the next resistance level could be near 1450 and the 200-day moving average. If the market turns lower and trades through 1381 – 1401 support, further support could be found near 1330.
Wheat
Market Notes: Wheat
- US wheat futures may have inherited some weakness today from other global markets. Matif wheat futures closed lower, and harvest progress in Brazil is putting pressure on their prices as well.
- According to Interfax and the Russian Grain Union, Russia’s grain exports increased 27% year on year. Wheat shipments specifically were up 29% from August 1st to 27th.
- Concerns about China’s economy may be weighing on the grain complex as a whole. China is the world’s largest commodity buyer, so demand is a legitimate worry. China announced that they are going to reduce mortgage rates to help stimulate the economy, but so far, their attempts have had little success.
- December Chicago wheat posted a new contract low today at 5.99-1/2 but was able to close just above support at 6.00. Technically, it is oversold and could be due for a correction to the upside but may not have the fundamental support to sustain any significant rally.
Action Plan: Chicago Wheat
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
No Action
2024
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
Chicago Wheat Action Plan Summary
- No new action is recommended for 2023 crop. Since the end of May, the wheat market has been largely rangebound, influenced by weak demand, changing headlines from the Black Sea region, and the corn market with its own demand and weather concerns. With harvest in the rearview mirror, U.S. production has been better than expected and demand remains weak. Still, many supply questions remain unanswered from the Black Sea region, which could push prices in either direction. While Insider will continue to monitor the downside for any breach of major support, we would need to see prices pushed toward the 800 level before considering any additional sales.
- No action is currently recommended for 2024 Chicago wheat. Since the middle of June price volatility has risen with updated USDA reports, changing weather forecasts, and current events in the Black Sea. While prices continue to be volatile, plenty of time remains to market the 2024 crop. War continues in the Black Sea region, the world stocks-to-use ratio is the lowest in 8 years, and no one knows what the weather will bring, leaving the market vulnerable to many uncertainties. For now, after recommending making a sale for the 2024 crop, and while keeping an eye on the market to see if any major support is broken, Grain Market Insider would need to see prices north of 800 before considering recommending any additional sales.
- No Action is currently recommended for 2025 Chicago Wheat. 2025 markets are very illiquid right now, and it may be some time before conditions are conducive to consider making any recommendations. Be patient as we monitor the markets for signs of improvement.
Above: The Chicago wheat market appears to be consolidating between 650 and 596. If the market breaks out to the upside, the next level of resistance may be found near 665, if not, and the market drifts lower, the next level of support below the market may be found near 573.
Action Plan: KC Wheat
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
No Action
2024
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
KC Wheat Action Plan Summary
- We continue to look for better prices before making any 2023 sales. As more becomes known about this year’s crop with some reports of better than expected yields, questions remain about the world wheat supply. War continues in the Black Sea region, Ukraine’s export capabilities remain uncertain, and dryness continues in key production areas of the world. With a world stocks-to-use ratio at its lowest level in 8 years, we continue to target 950 – 1000 in the July futures as a potential level to suggest the next round of New Crop sales. At the same time, we continue to watch the bottom end of the range that prices have traded in since late 2022. A close below the bottom end would reduce the probability of getting to 950 – 1000 and would increase the risk of prices falling into the 600 – 650 range.
- No action is recommended for 2024 K.C. wheat. This year has been dominated by production concerns regarding the 2023 crop, and considering slow export demand and cheap Russian prices continue to be major headwinds for U.S. prices. Insider recently recommended buying July ’24 puts to protect unsold grain if prices continue to retreat further. While war persists in the Black Sea region, production concerns continue in the southern hemisphere due to El Nino, and the world stocks-to-use ratio remains at an 8-year low, there are still many uncertainties that could shock prices higher. Plenty of time remains to market the 2024 crop, and after recommending buying July ’24 660 puts, unsold bushels will be protected if prices make new lows, and if prices turn around and rally higher, Insider will be looking for opportunities to consider recommending additional sales north of 850.
- No Action is currently recommended for 2025 KC Wheat. 2025 markets are very illiquid right now, and it may be some time before conditions are conducive to consider making any recommendations. Be patient as we monitor the markets for signs of improvement.
Above: December KC wheat broke through the bottom end of its trading range and may be poised to test the September ’21 low of 670 unless bullish input enters the market to turn prices higher. If so, initial resistance above the market may rest near 772 – 780.
Action Plan: Mpls Wheat
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
No Action
2024
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
Mpls Wheat Action Plan Summary
- No action is currently recommended for the 2023 New Crop. Weather has been a dominant feature to price volatility this growing season, with continued dryness concerns in not only the US, but also Canada and Australia. While there typically isn’t a strong likelihood of higher prices until after harvest is complete, both weather and geopolitical events can change suddenly to move prices higher. Insider will consider making sales suggestions if prices improve, while also continuing to watch the downside for any further violations of support.
- No action is currently recommended for 2024 Minneapolis wheat. This year has been dominated by production concerns regarding the 2023 crop, and considering slow export demand and cheap Russian prices continue to be major headwinds for prices. Insider recently recommended buying July ’24 puts to protect unsold grain if prices continue to retreat further. While war persists in the Black Sea region, production concerns continue in the southern hemisphere due to El Nino, and the world stocks-to-use ratio remains at an 8-year low, there are still many uncertainties that could shock prices higher. For now, plenty of time remains to market the 2024 crop and Insider is content to see how the market develops before suggesting making any additional sales. After recommending buying July ’24 K.C. wheat 660 puts for the liquidity and high correlation to Minneapolis wheat’s price movements, unsold bushels will be protected if prices make new lows, and if prices turn around and rally higher, Insider will be looking for opportunities to consider recommending additional sales.
- No Action is currently recommended for the 2025 Minneapolis wheat crop. 2025 markets are very illiquid right now, and it may be some time before conditions are conducive to consider making any recommendations. Be patient as we monitor the markets for signs of improvement.
Above: Since the middle of August, the market has been consolidating between nearby support and resistance of 786 and 820. Should the market break out of the current range, key support below the market lies near the May low of 769, with the next support level near the June ’21 low of 730. Above the market, the next area of resistance could be found near 837.
Other Charts / Weather
